[WASHINGTON] An alleged international insider trading conspiracy that US officials say yielded millions of dollars in illegal profits all started over a Michelin starred meal at a Paris restaurant owned by an ex-Merrill Lynch investment banker.
In November 2016, day trader Eamma Safi asked his Facebook contact Zhi Ge to travel from Italy to meet him and an owner of the restaurant, Samy Khouadja. “Friday you will be welcomed to our world of business,” Safi told Ge in a message sent just ahead of their lunch, according to a US indictment made publicly available this month.
To mark the occasion, Safi – also known as “Yummy” – took a photo of the trio at Hexagone, a now shuttered classic French restaurant with a modern twist that was a short walk from the Place du Trocadéro and its views of the Eiffel Tower. In the picture Ge grins broadly with his companions. Behind him candlelit tables give way to vast mirrors and ornate feather frescoes.
Now that picture is being used by the US Department of Justice as part of a clampdown on traders who allegedly raked in more than US$17 million from a staggering number of insider tips on more than 15 deal targets, including Principia Biopharma and French utility Suez.
The allegations detail what authorities say was a globe-spanning insider ring that used disposable burner phones, derivatives, and a kickback payment made with a plastic bag stuffed with US$108,240 in a Vienna café. None of the companies named in the complaints is accused of wrongdoing.
This story on the purported ring’s activities was compiled from US court documents and interviews with people familiar with the case.
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After the Paris lunch, Ge apprently got straight to work. Messages were exchanged with increased frequency and started to use language including “shoes” and “running,” which the US says was code for using disposable burner phones to communicate about insider trading.
Ge then allegedly contacted a Singapore resident to share non-public information about a US$470 million acquisition in the food sector that would be announced two months later.
Soon, Ge and Safi were travelling halfway across the world via Dubai to Singapore and Hong Kong for meetings. According to the DOJ, Ge’s role was to reel in additional traders by passing on tips provided by Safi and requesting 50 per cent of proceeds in kickbacks.
After the food deal was announced in January 2017, Ge bragged to one of his contacts in Singapore that more tips were on the way. “This is just one deal,” he said in the message laid out in the US case. “We have a new one every two weeks.”
The US ended the suspected ring’s profitable run arresting Safi in Zurich and Ge in Singapore in a show of US financial authorities’ efforts to police alleged misconduct abroad. Federal prosecutors in Boston and the Securities and Exchange Commission accused Safi, Ge and a third trader, Ronald Cordas, of amassing about US$8 million in their biggest coup by trading Tiffany & Co stock ahead of the news of LVMH Moët Hennessy Louis Vuitton’s approach to buy it.
Cordas has pleaded guilty, turned cooperator and will prove crucial to a successful prosecution.
The allegations were unsealed this month and revealed that Safi, 37, was arraigned at a Boston court on Feb 27 and pleaded not guilty to money laundering and securities fraud charges. Ge is still in Singapore fighting extradition and is yet to enter a plea. French prosecutors have also been conducting a years-long parallel investigation that hasn’t led to any public accusations or charges.
Khouadja, who worked at Merrill Lynch until 2014 before opening Hexagone, wasn’t charged as part of the US case and isn’t named in the DOJ filings. But his work history matches up with that of “co-conspirator 1” in the indictment. People familiar with the case, who asked not to be identified discussing the proceedings, confirmed his identity.
In total, the US listed 11 alleged co-conspirators, the majority of whom lived in Singapore.
Dominique Inchauspé, a Paris lawyer for Khouadja, said he had received no information or request from the US and added that his client “has never committed any offences of any kind.” Safi and Ge didn’t respond to multiple requests for comment made directly through LinkedIn, via companies associated to them and to lawyers.
US authorities have made the conversations at the Hexagone restaurant a central part of their case, connecting Safi and Khouadja to the alleged source of five insider tips. The presumed tipster, a former colleague of Khouadja’s who is referred to as “co-conspirator 2” by the Justice Department, is named François-Régis Robert, the people said.
Neither US prosecutors nor the SEC identify him by name and Robert has not been publicly charged in France or the US with any crime or wrongdoing in the alleged scheme. His work history aligns with an unnamed in-house deal advisor for Atos and then Worldline, referenced by US officials in their complaints. That person previously worked at Merrill Lynch in France.
France is also examining Robert’s potential role as the source of millions of euros in insider trading profits, including on two deal announcements examined by the US. French officials raided Robert’s Paris home last year seeking evidence of communication with Khouadja over suspicious trading gains made by Safi and two others.
At the time Robert’s lawyers denied any wrongdoing and said that the French investigation will show any possible allegations he might face are unsubstantiated.
Asked about the more recent US cases his attorney, Edward Huylebrouck, said “my client has no knowledge of this procedure and is not a party to it.”
Cordas was also allegedly recruited over a meal at Hexagone. Ge arranged the meeting in mid-2017 after meeting US-based entrepreneur during a trip in Los Angeles to try to develop a film script that he had written, according to Justice Department filings.
Ge allegedly told Safi in series of messages that he felt “comfortable” about Cordas, adding “he’s not super big size but he’s legit.” In Paris, Safi greeted Cordas with champagne and sent Ge a photo of them raising a toast.
“Boom!! You guys look great,” responded Ge.
After the introductions were made, the US alleges Safi, Ge and Cordas made more than US$2 million from Robert’s tips. These included trades on Ingenico before its €7.8 billion (S$13.5 billion) acquisition by Worldline in 2020. Safi asked Cordas shortly after to wire US$300,000 to a Hong Kong associate explaining he would “pass on the gift” by paying his sources of inside information, according to the SEC.
Safi, Ge and Cordas are accused of making millions more, including the Tiffany trades, from different sources. Over time, Cordas took bigger bets, US officials said.
Once, Cordas messaged a friend saying “URGENT. Buy Tiffany Co. symbol is TIF. Load the f––n’ truck up.”
Cordas didn’t respond to requests for comment via LinkedIn while a number and other contact details for him couldn’t be located. A Justice Department spokesperson declined to provide any contact information for Cordas or his lawyer.
According to the US criminal complaint Cordas has pleaded guilty to conspiracy to commit securities fraud and is co-operating with authorities.
His LinkedIn profile shows a career spent on branding and sales in the silicone tape industry that ended in 2019. On his profile, he wrote “Now retired and enjoying my life!”
Meanwhile, Ge’s role evolved over time. The Justice Department said he sought to find new sources of confidential information, once telling an actor friend in the New York area that he was “looking for investment bankers in big banks working in M&A specifically.”
According to prosecutors his willingness to trade on insider information led to bigger wins. His largest profit allegedly came from the last trade outlined in the indictment, where he collected some US$3.8 million in February 2024 with trades on German biotech MorphoSys just before Novartis announced its acquisition of it.
However, as their gains grew so did the group’s sense of paranoia. When Ge first made the connection with Cordas, Safi warned him “with Americans you always need to be careful never trust them,” according to messages laid out in the indictment.
Ge later suggested to Cordas “better not tell your wife” and added that it “might be a bit dangerous.”
They also put extra precautions in place after French authorities charged Khouadja in 2018 for insider trading in a separate case. That investigation is still ongoing and no decision has been made whether to hold a trial. Khouadja’s lawyer said his client has never committed any crimes.
“We need to delete our old group chat from our intro last summer,” Cordas said to Ge in a message, after speaking with Safi. “He says we should also delete our chat here, you and me, because his name might have been mentioned.” BLOOMBERG
